Apparently that euphoria set off alarm bells among short sellers, who place bets that stocks will tumble. They are eyeing El Pollo Loco because it's unprofitable. It has lost more than $50 million over the past three years.

"Virtually every security that has become available to lend is being snapped up," said Tim Smith, an analyst at SunGard's Astec Analytics team, which tracks how many shares short sellers are trying to trade.

Short sellers borrow and then sell shares, betting they can buy them back later at a cheaper price -- and pocket the difference.